By Peter C Glover, Energy Tribune, 22 November 2010
While the next climate summit in Cancun, Mexico at the end of this month will make a show of sifting the geopolitical wreckage from last December’s climate summit, any real prospect for coordinated international action is, post-Copenhagen, dead in the political water. As if that were not enough, the bête noire of climate alarmists, King Coal, is, once again, reigning supreme.
All of which begs the question: with all hopes for a global CO2 impact blown away, why are politicians tenaciously clinging to the fiction that regionalised carbon trading schemes – like the Western Climate Initiative – can succeed where national and international ones have failed?
Speaking to Energy Tribune, Dalibor Rohac, Research Fellow at London’s Legatum Institute which produces the annual Legatum Global Prosperity Index, explains, “If you believe that CO2 emissions are a major factor driving climate change you need to reduce emissions globally. Cutting emissions unilaterally through, say, increasing the price of carbon in one country or group of countries, leads to carbon leakage as carbon-intensive industries will move to jurisdictions where emissions are not restricted.”
Without international and national binding agreements the reluctance of industry to participate is already reflected in the slow death of carbon trading initiatives.
CCX closing – ECX next?
By the end of the year, the Chicago Climate Exchange (CCX), the only U.S. national carbon market which trades all six greenhouse gases, will quietly close its doors to its carbon credits business – the main purpose for which it was set up. Not that this major turning point warranted much coverage in the mainstream media which has made a new genre out of the war on CO2. While the Atlanta-based Intercontinental Exchange only purchased the CCX last April, its voluntary but legally binding system has reportedly ground to a halt in the absence of a federally-enacted cap and trade scheme.
Meanwhile, across the water the European Climate Exchange (ECX), the leading platform for the EU’s Emissions Trading Scheme, is still trading. But when the Kyoto Protocol expires in 2012 with its requirement for mandatory carbon caps, it is widely expected to go the way of its Chicago sister – and a new British report makes clear why.
According to the report by Sandbag, a group calling for even tighter greenhouse controls, the entire five-year period of the EU’s ETS is set to deliver miniscule carbon savings of less than one third of 1 per cent of total emissions. The world’s oldest carbon trading scheme has simply failed to make any serious impact on global carbon emissions, the purpose for which all such schemes exist.
In June 2010, Japan put on hold plans to introduce emission trading laws. Australia has delayed any decision on a carbon trading scheme until 2013 at the earliest and at the Copenhagen conference India’s Environment Minister Jairam Ramesh stated flatly, “India will not accept any emission reduction target – period.”
In North America, however, local politicians still insist that regional initiatives, including the Greenhouse Gas Initiative in the east of the United States and the Western Climate Initiative (WCI) in the west and Canada, could prosper. The WCI, for instance, is a partnership of seven U.S. states and four Canadian provinces. The WCI wants to establish a cap and trade system by January 2012 that, ultimately, aims to reduce regional greenhouse gas emissions to 15 percent below 2005 levels by 2020.
“This is simply puzzling,” says Rohac. “Regional initiatives are unlikely to have any effect whatsoever on global emissions and therefore on climate change.”
Far from being over the age of coal is experiencing a renaissance. Just as in the West, coal is driving growing economic prosperity of China, India, Brazil and other fast-industrializing nations.
Rohac told Energy Tribune, “Cheap coal and the wide availability of shale gas make decarbonisation in the near future very unlikely. Even if developed countries committed to switch to renewables, this would be offset by the rising emissions in China.”
As our former colleague Robert Bryce recently pointed out, such is the current and prospective growth in coal use that investment bankers, like Tudor Pickering & Co in the U.S., are once again advising there’s plenty of money to be made in buying coal stocks. In 2009, U.S. coal consumption averaged 10 million barrels of oil equivalent (boe) per day – a 52.3 per cent increase over 1973 levels. Over the same period, natural gas consumption increased by just 3.8 per cent and oil by just 3 per cent. The importance of coal to the U.S. economy cannot be overstated. Globally too, coal consumption currently totals around 66 million boe per day, a 107 per cent increase since 1973.
In today’s global commodities market King Coal still reigns supreme. The International Energy Agency projects global coal consumption will increase by more than 50 per cent by 2030. 97 per cent of that increased coal consumption will be in Asia. China is currently opening one coal-fired power station every week, a process set to continue for years to come.
The World Bank meanwhile has been severely criticised for continuing to support investment in coal-fired power stations in places like India and South Africa; in the latter case the electricity produced also serves surrounding countries. The simple fact is that coal is cheap and accessible and a coal-fired power station can be up to eight times more efficient in electricity generation than renewable energy projects.
As the World Bank maintains, it is hard to fight poverty for people without any electricity. Put bluntly, when it comes to the developing world, investment in efficient poverty-eradicating electricity projects ranks morally higher than fighting a war against carbon that is based on a speculative theory, and which is, as the statistics make abundantly clear, already lost.
As Rohac puts it, “Decarbonisation has never been in the interest of developing countries.” But given that the fast-industrialization of the developing nations will continue to eclipse all Western carbon initiatives, it is hard to disagree with Rohac’s assessment that “Western carbon-cutting efforts are mostly a waste of effort and resources.”
Energy Tribune, 22 November 2010
Obama’s Green Deal Isn’t Working
By Michael A. Fletcher, The Washington Post, 23 November 2010
After losing his way in the old economy, Laurance Anton tried to assure his place in the new one by signing up for green jobs training earlier this year at his local community college.
Anton has been out of work since 2008, when his job as a surveyor vanished with Florida’s once-sizzling housing market. After a futile search, at age 56 he reluctantly returned to school to learn the kind of job skills the Obama administration is wagering will soon fuel an employment boom: solar installation, sustainable landscape design, recycling and green demolition.
Anton said the classes, funded with a $2.9 million federal grant to Ocala’s workforce development organization, have taught him a lot. He’s learned how to apply Ohm’s law, how to solder tiny components on circuit boards and how to disassemble rather than demolish a building.
The only problem is that his new skills have not resulted in a single job offer. Officials who run Ocala’s green jobs training program say the same is true for three-quarters of their first 100 graduates.
“I think I have put in 200 applications,” said Anton, who exhausted his unemployment benefits months ago and now relies on food stamps and his dwindling savings to survive. “I’m long past the point where I need some regular income.”
With nearly 15 million Americans out of work and the unemployment rate hovering above 9 percent for 18 consecutive months, policymakers desperate to stoke job creation have bet heavily on green energy. The Obama administration channeled more than $90 billion from the $814 billion economic stimulus bill into clean energy technology, confident that the investment would grow into the economy’s next big thing.
The infusion of money is going to projects such as weatherizing public buildings and constructing advanced battery plants in the industrial Midwest, financing solar electric plants in the Mojave desert and training green energy workers.
But the huge federal investment has run headlong into the stubborn reality that the market for renewable energy products – and workers – remains in its infancy. The administration says that its stimulus investment has saved or created 225,000 jobs in the green energy industry, a pittance in an economy that has shed 7.5 million jobs since the recession took hold in December 2007.
The industry’s growth has been undercut by the simple economic fact that fossil fuels remain cheaper than renewables. Both Obama administration officials and green energy executives say that the business needs not just government incentives, but also rules and regulations that force people and business to turn to renewable energy.
Without government mandates dictating how much renewable energy utilities must use to generate electricity, or placing a price on the polluting carbon emitted by fossil fuels, they say, green energy cannot begin to reach its job creation potential.
“We keep getting these stops and starts in the industry. There is no way it can work like this,” said Bill Gallagher, president of Solar-Fit, a Florida energy company whose fortunes have fluctuated with government incentives in its 35 years in business.
Like many people who run renewable energy companies, Gallagher said he sees no need to expand his 25-employee firm because the business is simply not there.